1. Field of the Invention
This invention relates to data automation techniques for automatically assembling packages of items, and more particularly, to affinity algorithms for grouping products or services. Still more particularly, the invention relates to web-based techniques for dynamically assembling items including, but not limited to, last-minute travel and entertainment packages for purchase by consumers.
2. Description of Related Art
1. Consumer Demand Exists for Last-Minute Travel Services . . .
In today's ever-changing, hectic world, consumers are increasingly forced to make plans at the last minute or alternatively to not make any plans at all. With the increased penetration of technology into today's society, people are on-call and reachable 24 hours a day, seven days a week. The high penetration of technology has also increased the geographic reach of today's corporations. As the business world reaches beyond national borders, workdays have been extended to accommodate different time zones and cultural styles. Globalization also suggests more and longer business trips as companies grow and interact on a global basis.
Increased competition among the world's various corporations has led to the need for longer workdays. As a result of these trends, the average also an increased need to maximize the reduced leisure time available.
Furthermore, there is a trend toward more dual income households, increasing to 61% in 1993 from only 39% in 1970. With this shift, there are fewer spouses at home with the luxury to spend serious amounts of time planning a family's leisure life.
For consumers, increasingly hectic lifestyles and longer work hours lead to less time for planning leisure activities and create a greater desire to enjoy the limited time available. This often translates into spur-of-themoment vacation travel planning. There is a demonstrated need to help the consumer plan immediate and last-minute travel.
2. . . . But Current Offerings are Insufficient.
Modem telecommunications services have transformed the travel industry by providing consumers instant access to airline, hotel, and rental car reservation services. It is now possible to purchase last-minute airline tickets. and to make rental car and hotel reservations by visiting airline, rental car, hotel, and general travel websites on the World Wide Web. However it continues to be a daunting proposition to arrange travel at the last minute using these sites. First, the consumer typically needs to do substantial up-front planning—deciding where to go and what to do—before using these services. Next, the consumer usually needs to visit several unrelated sites in order to arrange a basic travel experience, including air, hotel, and car rental reservations. Finally, even after securing these basic reservations, the consumer is left with no specific plans—where to eat, what shows to see, what to buy—once he or she arrives at the destination city. Making these destination-specific plans requires additional up-front planning; securing the reservations usually requires a series of phone calls.
3. Suppliers have Demonstrated Need to Sell Last-Minute Inventory . . .
Suppliers of travel related services (e.g., hotels, airline tickets, restaurants, etc.) also have a great need to offer last-minute travel arrangements to consumers. The total travel industry has been growing at an annual rate of in excess of 5% over the past decade. Partly underlying this increase is growth in weekend, leisure getaways. According to the Travel Industry Association of America, weekend trips by Americans increased 70% from 1986 to 1996 (from 350 million trips in 1986 to over 600 million in 1996) versus a population growth of only 10% over the same period. Non-weekend trips increased 15% in the same timeframe. Two-day getaways now account for more than half of US travel. Overall vacations also continue to grow in popularity—increasing from 945 million people trips in the US in 1997 to 1.3 billion people trips in 1998.
Despite this growth, approximately $84 billion of travel service provider capacity expires unused each year in the high-fixed cost airline, hotel and entertainment industries due to unsold tickets/rooms in the U.S. alone. Airlines continue to lose out on major amounts of revenue by letting airline seats go unsold. With load factors averaging near 71% in 1999 for major carriers, airlines leave approximately 220 million airline seats on the table every year. At an average one-way ticket price of $141, this implies lost revenues of near $31 billion in 1998. Similarly, with occupancy rates hovering in the low-60s in 1998/99, hotels have an unsold capacity of near 560 million room-nights per year. At an average room night of $81 for unsold rooms, hotels lost out on near $46 billion of revenue in 1998/1999. Entertainment venues also often do not sell out. Approximately 195 million tickets go unsold per year, assuming a load factor of 73%. At an average ticket price of $33, the entertainment industry experience an annual S7 billion in lost revenue.
Combining the airline, hotel and entertainment categories leads to a total lost opportunity to suppliers of nearly $84 billion each year in the U.S. alone. Furthermore, as these categories have insignificant variable costs, most of these lost revenues would have trickled down to the bottom line. Tapping into this otherwise perishing inventory offers a huge opportunity to increase efficiency, reduce waste and increase profits.
4. . . . But Current Channels are Inadequate
In choosing where to try to market their excess inventory, suppliers generally seek two major capabilities from a third party: 1) The third party's ability to sell difficult inventory that the supplier has not been able to move through their traditional channels, and 2) the third party's ability to move this inventory without making discounts transparent to consumers, and therefore to protect the supplier's base business against cannibalization.
Third parties can satisfy both supplier demands by bundling separate components from different suppliers into packages. Individual pieces of undesirable inventory can become attractive, and more “saleable,” when intelligently assembled together as a package. By packaging inventory 15 third parties can also offer a single package price which hides the price of each component, preventing the erosion or cannibalization of a supplier's base business.
Of course, the concept of offering combinations of various travel related services as a package is nothing new. For many years, travel agents have been putting together customized vacation packages for their clients, and travel discounters have been marketing prepaid vacations including transportation, hotel accommodations, and restaurant arrangements collected from different suppliers. Today travel agents offer vacation packages over the World Wide Web, with booking and purchasing accomplished online. Making travel arrangements in this fashion is convenient, quick, and efficient.
However, these packages-whether sold over the phone or on the web-generally fall to incorporate much last-minute, truly distressed inventory: today's third-party travel service providers simply do not have the capabilities to unleash demand for last-minute travel. Putting packages together quickly is extremely difficult and time-consuming due to the enormous number of permutations that exist when one combines available flights with available hotels and available events. Providing highly customized, mood-based packages to consumers adds yet another level of complexity to package creation. And suppliers make it even harder for packagers because they are often unwilling to make inventory available as “distressed” until they are sure they will not be able to sell it through existing channels.
Packaging non-distressed, non last-minute inventory provides only partial value to consumers: they receive the convenience of a pre-packaged getaway without any level of individual or mood-based customization and without taking advantage of the low prices offered on truly last-minute inventory. For suppliers, packaging provides an acceptable conceptual solution to marketing their truly last-minute, distressed inventory, but not an effective or a practical one. And unpackaged channels remain undesirable to suppliers because they fall to protect their base businesses from price erosion or cannibalization.
It would be highly desirable to find a solution both to consumers' appetite for fully-packaged last-minute travel and to suppliers' desire to move their unsold, perishing inventory without impairing the viability of their base businesses. Due to the widespread advances in communication capabilities, to effectively market close-to-expiring travel inventory in real time directly to consumers. Because the packaging of perishable, last-minute inventory is so time-sensitive, there is substantial need to put packages together quickly and efficiently. The required solution must provide an automatic system and improved method capable of receiving and categorizing inventory and putting together packages on a real-time, dynamic basis.
5. Present Invention Solves Last-Minute Travel Problems of Both Consumers and Suppliers
When offering items for sale through a computer system, for example on a Web site, it is useful at times to group the items together into a package. Such a capability is particularly advantageous in connection with last-minute travel offerings, but could have other applications as well. Examples might include but are not limited to: products such as components of a stereo system or a selection of diverse yet related gifts; products and services together, as with appliances, carpentry, painting, flooring replacement, and cabinetmaking for a kitchen renovation; or bundles of services, such as legal services, real estate brokerage, and mortgage brokerage for a house sale.
If the business or businesses offering the items for sale offer many items that may potentially be grouped into packages, with substitutable elements, the problem of finding appropriate elements to group into packages and thus appropriate packages to offer for sale can be difficult to solve. Some elements may be good matches for each other—for example, in a stereo component system a powerful amplifier might be better paired with large speakers than small speakers—and others less so.